Immunology Among Areas to Watch as Johnson & Johnson Gears Up to Report Results

Johnson & Johnson (JNJ) will unveil its first-quarter results tomorrow morning, and among the areas to watch is the company's immunology franchise.

New Brunswick, N.J.-based Johnson & Johnson expects its immunology franchise to continue to grow this year despite the company's expectations of a 10% to 15% market share erosion for Remicade, noted Tony Butler, an analyst with Guggenheim Securities, in an interview on Monday.

Remicade is a treatment for arthritis, ulcerative colitis and Crohn's Disease. Pfizer (PFE) launched Inflector, a biosimilar of Remicade, in November.

Besides Remicade, Johnson & Johnson's immunology franchise includes Stelara and Simponi.

Another area to watch, Butler said, is the diabetes drug Invokana, which has faced competition from Eli Lilly's (LLY) Jardiance. Importantly, however, a large cardiovascular outcome trial, billed Canvas, will read out at the
 American Diabetes Association meeting in San Diego in June and a positive outcome "could place Invokana on even footing with Jardiance," he said.

The oncology franchise is also an area within Johnson & Johnson's pharmaceuticals unit to keep an eye on, Butler said. The franchise includes  Darzalex , a treatment for multiple myeloma, and Imbruvica, a treatment for marginal zone lymphoma.

"Prescription trends for Darzalex reveal sequential growth of 22% in the quarter and likewise Imbruvica prescription trends appear up 13% sequentially,  which illustrates accelerating growth versus the 6% growth (sequentially) in Q4 2016," Butler said.

Butler has forecast Johnson & Johnson to have revenue of $18.1 billion and adjusted earnings per share of $1.75 for the first quarter.

Shares of Johnson & Johnson were trading at $125.75 on Monday, up 0.6%. The stock is up 9% year-to-date.

Analysts polled by FactSet Research Systems estimate, on average, first-quarter revenue of $18.02 billion and adjusted EPS of $1.72.

In January,  Johnson & Johnson said it will purchase Swiss biotech Actelion Ltd. for $30 billion and plans to spin out the latter's research and development unit into a separate business. Johnson & Johnson said in March that the transaction remains on pace to close in the second quarter.

In February, Johnson & Johnson completed its purchase of Abbott Laboratories' (ABT) medical optics business in a $4.325 billion deal first announced in September.

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